Squandered oil wealth, an African tragedy

-Arvind Ganesan is the Director of the Business and Human Rights Program at Human Rights Watch. The opinions expressed are his own.-

Equatorial Guinea is a tiny country of about half a million people on the west coast of Africa, but is the fourth-largest oil producer in sub-Saharan Africa.

Most of the investment in the country’s multi-billion dollar oil industry comes from the United States. ExxonMobil, Hess and Marathon are all there. Right now, the U.S. imports up to 100,000 barrels of oil a day from Equatorial Guinea, or about a quarter of the country’s oil production.

Oil money gives the country the means to be a model for development and human rights. The economy is nearly 130 times as big as it was when oil was discovered in 1995. But as a report released by Human Rights Watch today details, the government has squandered or stolen much of the money at the expense of its people.

It is a sad contrast, since the country has a per capita income comparable to Spain’s or Italy’s and development indicators more like Afghanistan’s. For just one sad example, infant and child mortality actually has increased — from an already-dismal 103 deaths per thousand in 1990 to 124 per thousand in 2007. Similarly, under-5 mortality rates increased from 170 per thousand in 1990 to 206 per thousand in 2007.

The president and his family are doing just fine, though. They lead lavish lifestyles while most people live in crushing poverty.

A series of corruption scandals involving government officials and their families will give you some idea of how bad it is.

In 2004, a U.S. Senate investigation into the country’s dealings with the now-defunct Riggs Bank detailed how President Teodoro Obiang Nguema Mbasogo used the country’s oil wealth to finance numerous personal transactions, including spending $3.8 million to buy two mansions in a suburb of Washington, D.C. That investigation led to one of the largest fines against a bank in U.S. history, and ultimately the bank’s takeover.

Obiang’s eldest son, Teodorin, bought a $35 million property in California in 2006. In 2004, he spent about $8.45 million for mansions and luxury cars in South Africa. His only known income was a $4,000 monthly salary as a government minister. His $43.45 million in spending on his lavish lifestyle from 2004 to 2006 was more than the $43 million the government spent on education in 2005.

The people of Equatorial Guinea have no way to hold their government accountable. Obiang has been in power since 1979, when he deposed his uncle in a coup. The government severely curtails press freedom and independent civil society, and the political opposition is weak and faces constant government harassment, intimidation, and arrests. In the most recent parliamentary elections in May 2008, Obiang and his allies won 99 out of 100 seats.

The government has joined the Extractive Industries Transparency Initiative (EITI), an effort to make natural resources benefit everyone by setting a global standard for openness in oil, gas, and mining. However, the government has been very slow to implement the initiative’s standards. The danger is that EITI may give the government a veneer of legitimacy even while it stifles its critics and opposes real scrutiny.

Perhaps the best prospect for reform lies with the Obama administration since most of the investment in Equatorial Guinea’s oil comes the US. There are in fact things the administration can do now to break the cycle of corruption in a place like Equatorial Guinea. It should hold the government accountable for human rights and insist that it rigorously enforce anti-corruption laws. Under the Bush administration, that did not happen.

The same month in 2006 that Obiang’s son bought a $35 million Malibu mansion, Secretary of State Condoleezza Rice met with Obiang in Washington and called him “a good friend” at a news conference.

Unless the Obama administration makes it clear to Equatorial Guinea’s leaders that they must share the oil wealth with the country’s people , the human cost of the oil that the US imports from that country will continue to be staggering.

Unfortunately, this “curse of oil” now threatens to affect countries rich in other resources as well: uranium in Niger and Namibia, for example. It’s going to be quite a challenge for African oil-producers and other energy suppliers to hold governments accountable. Some are saying now that the constitutional crisis in Niger and President Tandja’s desire to extend his mandate are directly related to elites wanting control over uranium supplies. I hope systems for sharing wealth equitably are created, otherwise we may see more resource conflict, more corruption, and more political tension in many African countries.

You can be pretty sure that Equatorial Guinea’s leaders will simply ditch the US if they try to take their cash cow away. China will replace the US, the oil goes to China and the situation stays the same.

My understanding is that Africa has most of the cobalt on the planet. Cobalt is used to make high-performance metals – e.g. for military applications – and Lithium batteries. In the natural environment Cobalt can be synthesized into Vitamin B12 which the body requires for DNA. So to me whoever controls Africa also controls most of the cobalt and therefore the development of human civilization as we know it.I read a supporting article on the San Fransisco BayView, the national black newspaper: “Cobalt is essential to our military industries’ ability to manufacture the modern weapons of war. So, the Congo War, a.k.a. the African holocaust, is a war for the sake of war itself.”It makes sense that the cradle of life for humans also contains the optimum concentrations of raw materials giving rise to humans. Unrest and poverty in Africa has consequently been portrayed as the result of Western influence – using Africans as proxies in order to extract all of the available resources.

Those who controlled the Levers of the State were able to snaffle an egregious share. There was no trickledown and the Financial Architecture post Independence meant easy pickings. The sad part is that those who were in Control of the Levers of the State ripped off its Citizens and the they were merely being given crumbs anywhere.Given the Fact that so many our People are Small Holders, far more effective trickledown would be effected by getting the Agriculture right.Aly-Khan Satchuhttp://www.rich.co.ke/rctools/rich tvc.phpTwitter alykhansatchu

I don’t see why US must bear special responsibility for situation in E.Guinea. It is obvious that oil companies run kickback schemes with E.Guinea gov.Arvind provided details of corrupted dictatorship. There is no single word why regime change would lead to prosperity rather than bloodbath.Unfortunately World is far from perfect. Don’t compare Equatorial Guinea to Spain or Italy. Compare Equatorial Guinea to Congo, Zimbabwe etc. At least E.Guinea people are not dying in numbers. Africa full of failed states. Bad dictatorship is better than failed democracy.If you study history you see that most elites are corrupted. Every ‘honest & fair’ elite immediately pillage country once it gets power. Rule of law settles when elite getting older and become concern with passing stolen booty to next generation. Unfortunately it is as much true for Africa as for L.America, E.Europe and Asia. USA and W.Europe the only different that they already went through this stage.I believe HRW must concentrate on Kongo, Darfur, Somalia, N.Korea. In this countries people parish in 1000’s.

[…] Unfortunately, this “curse of oil” now threatens to affect countries rich in other resources as well: uranium in Niger and Namibia, for example. It’s going to be quite a challenge for African oil-producers and other energy suppliers to hold governments accountable. Some are saying now that the constitutional crisis in Niger and President Tandja’s desire to extend his mandate are directly related to elites wanting control over uranium supplies. I hope systems for sharing wealth equitably are created, otherwise we may see more resource conflict, more corruption, and more political tension in many African countries. -Posted by Alex Thurston […]

Worse still, these exploration and development projects are not environmental-friendly. Not only deprive people of deserved wealth, but also dispossess them of their farmland and dwellings. Those oil mongers just pose as another risk similar to Union Carbide in India, i.e. be prepared to lose sight overnight.

If I had £4,000 in my bank account and suddenly splashed out on a £35,000 mansion, the Serious Fraud Squad in the UK would pay me a visit and quiz me about the source of my income. If there were ‘unusual’ transactions in your account, the banks were obliged by law to alert the authority. I’m sure the US has a similar law. What do you guys call someone that handles stolen goods …accessory to …? Yet someone you know that doesn’t earn much spends a mind boggling amount (even by UK/US standard) and you’re aware of that fact, aren’t you an accessory to his crime? I’m not au fait with the legal intricacies but I know someone is abetting someone else to commit a crime. Doesn’t the victim have a legal recourse against the perpetrator and his/her accessories? Wasn’t a class-action filed against Chiquita for funding paramilitary groups in Colombia? Didn’t the Cincinnati-based organization make a $25 million settlement to the United States Justice Department for the same offence in the same country?Money stashed away in the Swiss banks and elsewhere by past and present morally bankrupt African leaders is phenomenal. These mindless crimes and mismanagement contribute to Africa’s slide into what appears to be a perpetual economic decline.One might be tempted to take comfort from the fact that the UK and the US are now doing something about these fraudulent pursuits by throwing the books at perpetrators and perpetuators for money laundering. But some regard this as a token gesture. And of course, too little too late for the many Africans dying from hunger and all kinds of imaginable diseases.When I was 21 years old in 1976, I thought Nigeria would be doing well socially, politically and economically in the international arena by the time I was 40. Looking back now, I realise we had it ‘so good’ even though my parents were living a mendicant life.Recently two Nigerian state governors where done for money laundering in the UK but both skipped bail and ignominiously fled back home. One of them was alleged to have had over £2 million cash on him. I’m sure there are such cases in US too. The criminals are now aware of this and are now hiding their loots in countries like China, Saudi Arabia and even Russia.If pressure be brought to bear on those who, advertently or inadvertently, encourage those moral decadent leaders, Africa, especially Nigeria, wouldn’t go cap in hand to beg for assistance.

Africa’s destiny is in the hands of its own inhabitants. The ruthless, impersonal intolerance of poor performers that is the foundation of Western economic progress, is deemed disrespectful and heartless in many African cultures. This humanity and reluntance to treat peers harshly, more than anything else, sustains the poor governance that is paralysing the continent. A lack or abundance of commodities, and the involvement or detachment of the USA or China, is purely coincidental.

We will see more resource conflict, more corruption, and more political tension in many African countries. African leaders cannot help themselves by latching onto western ideals of materialism, wealth and greed at the expense of there own people. The cultural aspect of how you attain wealth is unimportant in Africa and African leaders are the global masters of spindoctoring to there own people to retain power.